Original-Research: Marley Spoon Group SE - from NuWays AG
05.11.2024 / 09:01 CET/CEST
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Classification of NuWays AG to Marley Spoon Group SE
Company Name: Marley Spoon Group SE ISIN: LU2380748603
Reason for the research: Update
Recommendation: Buy
from: 05.11.2024
Target price: EUR 4.90
Target price on sight of: 12 months
Last rating change:
Analyst: Christian Sandherr
All eyes of profitability // strategic repositioning confirmed
Marley Spoon reported solid Q3 2024 results, with sales reaching EUR 84m, up 8% yoy (9M sales -1% yoy). This was carried by the continued execution of the company's strategic priorities, visible in a rise of order frequency of active subscribers (+11% yoy), improved average order volume (+13% yoy), slowed customer churn but also the successful integration of Bistro MD.
However, the total number of active subscribers declined slightly, influenced by ongoing seasonality and reduced reliance on deep discounting. Yet, the company is increasingly witnessing a stabilization with a customer base focusing more on quality and retention.
Importantly, Marley Spoon achieved a fourth consecutive quarter of positive operating EBITDA, posting EUR 2m, a EUR 3.7m yoy improvement (9M op. EBITDA EUR 3.9m). This turnaround is largely the result of the high contribution margin of 34.5% (+3.1pp yoy), a testament to the company's successful efforts in shifting its discount-heavy acquisition strategy to focus on customer lifetime value and order size but also positive implications from an improving product mix in the US as a result of the bistroMD acquisition. Further, the company's tight grip on G&A and marketing expenses reflect the successful pivot toward a more sustainable growth model that emphasizes profitability.
Upgraded FY24 contribution margin guidance. Thanks to notable contribution margin improvements across the group's end markets (9M: +2.3-3.1pp yoy) the company raised its FY24 expectations from previously flat yoy to a 2.8-3.1pp yoy increase. The previous op. EBITDA guidance of a mid-single EURm figure was confirmed. Yet, sales growth vs 2023 is now seen to come in flat to low single-digit (in constant currency).
Overall, the investment case, which is based on the sustainable turnaround, remains intact. From 2025e onwards, the company looks set to return to growth thanks to a further stabilizing subscriber figure but also an increasing LTV of new subscribers (i.e. higher retention and increasing AOV/AOF). With this, Marley Spoon is on track to reach profitability and a positive free cash flow during the end of 2026e.
BUY with a EUR 4.9 PT (old: EUR 5.40) based on DCF.
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2022273 05.11.2024 CET/CEST
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